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Canadian, Mexican and United States investors considering bringing a claim under the North American Free Trade Agreement (NAFTA) against a NAFTA State Party should be aware that the three-year window for notifying their claim will soon come to an end.  They must therefore take quick action to notify their claim by the end of March 2023 to be in a position to submit their request for arbitration before July 1, 2023, the final deadline for the submission of legacy NAFTA investment claims.

The NAFTA was terminated on July 1, 2020, with the entry into force on that same date of the United States-Mexico-Canada Agreement (USMCA). The USMCA Parties recognized the importance of a smooth transition from the NAFTA to the USMCA, particularly with regard to investors who had invested on the understanding that NAFTA’s Chapter Eleven (Investment) protections would be in place.  Annex 14-C of the USMCA therefore maintains NAFTA provisions on the protection and promotion of legacy investments for a period of three years post entry into force of the new agreement.  These provisions are consistent with the practice of Canada, the United States, and Mexico to provide a sunset period for investment protection under their bilateral investment agreements. …

Continue Reading The Window for Putting a USMCA State Party on Notice of a NAFTA Legacy Investment Claim Closes at the End of March

On September 24, 2022, the Office of the United States Trade Representative (USTR) announced the successful resolution of a labor complaint brought under the Rapid Response Labor Mechanism (RRM) of the United States-Mexico-Canada Agreement (USMCA).  This case marked the fifth time that the RRM has been invoked since its inception in 2020. The RRM represents the most tangible aspect of the Biden Administration’s worker-centric trade policy. As the number of these cases goes up, companies with production activities in Mexico–and particularly those in the automotive sector–should be mindful of their commitment to their workers’ labor rights.
Continue Reading The USMCA’s Rapid Response Labor Mechanism: An Increasingly Important Component of the Biden Administration’s “Worker-Centric” Trade Policy

The United States has requested dispute settlement consultations with Mexico under Chapter 31 of the United States-Canada-Mexico Agreement (“USMCA”) concerning a range of energy policies adopted by the Government of Mexico that the United States believes discriminate against U.S. interests in violation of the USMCA.  According to a press release issued by the Office of the U.S. Trade Representative Katherine Tai:

Mexico’s policies have largely cut off U.S. and other investment in the country’s clean energy infrastructure, including significant steps to roll back reforms Mexico previously made to meet its climate goals under the Paris Agreement.  Mexico’s policy changes threaten to push private sector innovation out of the Mexican energy market.  To reach our shared regional economic and development goals and climate goals, current and future supply chains need clean, reliable, and affordable energy.

Canadian Trade Minister Mary Ng has indicated that Canada has joined the United States in challenging these actions through the same dispute settlement mechanism.  This is the first time that the United States and Canada have both pursued USMCA dispute settlement consultations with Mexico on policies of mutual concern.…

Continue Reading United States Seeks USMCA Dispute Settlement Consultations With Mexico Over Range of Energy Policies

2022 is shaping up to be a critical year for the Biden Administration regarding U.S. international trade policy.  In 2021, the Biden Administration made headway in resolving some of the challenges with United States’ allies that arose during the last Administration, and trying to build bridges in important regions that had perhaps had been neglected.  But in a number of other critical areas, and arguably in the most significant areas, the Biden Administration made little tangible progress over the past year.  The discussion below offers a look back at the key developments in 2021 with respect to U.S. trade relations with the EU, China, the rest of Asia and North America, and a look ahead at what could come in 2022.
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Continue Reading The US International Trade Agenda: A Look Back, A Look Ahead

US and Mexican labor unions and, separately, the US Government, have filed the first labor cases under the Rapid Response Mechanism (“RRM”) of the United States-Mexico-Canada Agreement (“USMCA”).  The RRM was a relatively late addition to the USMCA – the result of negotiations between the Trump Administration and House Democrats – and provides for facility-specific review by an independent panel, and remedies, in response to allegations of a “denial of rights” of free association and collective bargaining.  The USMCA is currently the only US free trade agreement to include a mechanism to address alleged labor rights violations at specific facilities in the territories of the Parties.

On May 10, 2021, the American Federation of Labor and Congress of Industrial Organizations (“AFL-CIO”), Service Employees International Union (“SEIU”), Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios Movimiento 20/32 (“SNITIS”), and Public Citizen announced that they filed the first labor case under the RRM.  The petition alleges that auto parts manufacturer Tridonex, a subsidiary of Philadelphia-based Cardone Industries, has engaged in the following labor violations, including with respect to the current SITPME union that is active as the Tridonex facility:

  • “Tridonex has denied its workers the opportunity to read or obtain copies of the collective bargaining agreement with SITPME.  Tridonex has failed to deposit its CBAs with the Federal Conciliation and Arbitration Board, as required by the Mexican Constitution.”
  • “Tridonex and the SITPME union, acting as an agent of Tridonex, have jointly denied the Tridonex workers the opportunity to ratify their CBA, in violation of Art. 400 Bis of the Federal Labor Law.”
  • “Tridonex and SITPME, acting as an agent of Tridonex, have jointly denied members of SITPME at Tridonex the right to elect their union leaders by personal, free, direct and secret vote, in violation of Art. 358.II of the Federal Labor Law.”
  • “SITPME, acting as an agent of Tridonex, has failed to provide its members with legally-required financial information reports under Art. 373 and Art. 358.IV of the Federal Labor Law.”
  • “Tridonex retaliated against workers who signed petitions to the Local CAB by firing more than 600 workers and compelling them to sign “voluntary” resignations in order to receive severance pay, in violation of Article 47 of the Federal Labor Law, and by denying other workers benefits agreed on through the CBA, in violation of Article 396 of the Federal Labor Law.”

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Continue Reading US and Mexican Unions, Followed by US Government, File First Labor Cases Under USMCA “Rapid Response” Mechanism